Consumer confidence down for first time this year
CONSUMERS lost confidence in the economy last month for the first time since last December.
Uncertainty over the fiscal treaty referendum and the ongoing eurozone crisis have been blamed for the reverse.
Up to now the mood of consumers was slowly improving, according to the KBC Bank/ ESRI consumer sentiment index.
The index fell from 62.5 to 61.0 last month, the first time it has fallen in almost six months.
The decline was seen as an "inevitable correction" following a steady rise recorded in sentiment since the start of the year, as the economy failed to produce any positive growth signs.
But KBC Bank economist Austin Hughes said there was a slight improvement in consumers' expectations for jobs and their household finances.
A string of jobs and investment announcements from foreign firms has prompted a large number of consumers to expect unemployment to stop rising.
Mr Hughes said there were some signs that the numbers on the Live Register have stabilised, prompting a more hopeful outlook on jobs.
There was a slight improvement in the assessment of households for their personal finances over the next year. Despite this, one in three consumers still expect a weakening in their spending power in the next 12 months.
Mr Hughes said that overall the mood of consumers remains fragile. "We don't think the May reading signals a dramatic shift in thinking among Irish consumers. Instead, it emphasises the fragile and patchy nature of what is a fairly tentative turnaround in consumer sentiment and in the broader Irish economy."
The May reading seems to be an almost inevitable correction following improvements in sentiment in each of the previous four months, he added.
"It likely reflects renewed concerns about the eurozone area as well as increased uncertainty ahead of the recent referendum on the fiscal treaty."
"For many consumers, the subject matter of the referendum may have seemed extremely complex, somewhat obscure and largely technical in nature. That, in itself, could have increased uncertainty."
Similar indexes compiled in other countries have generally risen in the past month, showing that Ireland's decline comes from domestic influences and not global ones.
Readings in the US and Europe reported an increase in consumer sentiment, he added.